New Cigarette Tax Will Help Fill Illinois’ Medicaid Hole

SPRINGFIELD, Ill. (IRN) — Illinois House approved $1.6 billion in Medicaid cuts and a new $1 per pack cigarette tax increase Friday that lawmakers say will help plug one of the nation’s biggest budget hole.

The dollar-per-pack increase will apply to cigarettes and a few other smoking devices, but not cigars or chewing tobacco. It’s expected to bring in $350 million which the feds will match dollar for dollar. It also changes hospital assessments statewide, which will bring in 50 million matchable dollars. The state’s looking to give hospitals a break on their property taxes through this bill as well, with tax breaks coming to those who provide a certain amount of charity care to the poor.

“$800 million to finish filling the gap for the Medicaid budget in the state of Illinois,” said State Rep. Barbara Flynn Currie (D-Chicago), the bill’s sponsor.

It was a close vote, but not as close as many expected as it received the minimum number of 60 votes needed to pass. 52 lawmakers voted no and six were absent for the vote.

The $800 million, combined with the $1.6 billion in cuts lawmakers approved earlier this week, bring the total Medicaid savings to $2.4 billion. Currie says the remaining balance will be filled through $150 million in unexpected general revenue. That money, as it’s being used to pay old Medicaid bills, will be matched by the feds – bringing the total to $300 million.

The bill now goes to the Senate, where cigarette tax hikes have passed in recent years.